Previous Section Index Home Page

6.28 pm

Mr. Graham Brady (Altrincham and Sale, West) (Con): It is always a pleasure to listen to the right hon. Member for Birkenhead (Mr. Field). I would not have minded listening to him for a little longer, but he was commendably brief. I am grateful to him for that, and will try to do the same service for colleagues who are still hoping to participate in this debate.

The right hon. Gentleman rightly said that one of the central points that needs to be addressed in future years, and perhaps even decades, is how we bring revenue towards expenditure. However, he was also honest enough to say that we urgently need to bring expenditure towards what can reasonably be borne by revenue, and the willingness and ability of the public to provide it. That is the central point that we need to consider in the context of this Budget.

22 Apr 2009 : Column 329

The right hon. Gentleman also spoke about the spectre of the vast and rapidly increasing levels of unemployment, as did a number of hon. Members in all parts of the House. That is an increasing concern for us all, in all our constituencies. I know that I am not alone in having seen unemployment in my constituency more than double in the past year, which is an alarming increase, albeit from a relatively low base. The announcement of £1.7 billion more to help deal with that problem is welcome, as long as it is used effectively. I have a real concern, however, that that might just go into the machinery of the new deal, and much of it could be wasted, just as so much has been wasted by using the revolving door method of taking people off unemployment benefit, thus reducing the apparent period of unemployment, then dumping them back on to it. I hope that the Government will make every effort to ensure that those resources are directed to the more effective schemes. Those are often the smaller, more local schemes run by voluntary organisations, of the kind that are all too often run much more effectively in other countries than they are here.

There are, of course, measures in the Budget that we all welcome. I was pleased to hear the reference to the trade credit insurance measures, for example. I am sure that Members across the House will hear repeatedly from those in their constituencies and elsewhere about the very real problems that they are encountering because of the withdrawal of trade credit insurance, so I hope that the scheme will be effective. All too often over the past few months we have seen schemes brought forward with commendable motives, but which do not seem to have come into effect as quickly or as substantially as is needed.

I want to say a few words about some of the details that should have been addressed in the Budget but have not been, before I make a wider point afterwards. I know that Ministers are engaged in live debates on these matters, but I want to highlight some of the things that are missing. Last year I spoke against the adoption of aviation duty, which I thought would be a bad tax that would have all sorts of negative effects. I was therefore delighted when, in November, the Government accepted that it would be a bad tax and would not work. However, they then responded by introducing some ad hoc measures relating to air passenger duty, which have problems of their own, especially in connection with the banding, and the fact that an unfair burden is being imposed on premium economy seats. I know that Ministers are dealing with those problems—or at least having discussions about them—and I know that they are difficult to resolve. However, given that the Budget papers today tell us that the projected revenues from air passenger duty are reducing rather than rising, we have to wonder whether the Government themselves think that they have got that tax right.

I raised the issue of fuel duty in the Budget debate last year. We have now seen a further increase. That will be painful for drivers, but massively painful for British hauliers, who face intense competition from continental Europe, where their competitors often pay much lower rates of duty. There was some recognition in the pre-Budget report of the problems relating to fuel duty, and it was said that the VAT cut would give a degree of compensation,
22 Apr 2009 : Column 330
although of course that will only be temporary. The Chancellor said earlier that he would keep an eye on oil prices, but we have heard from the hon. Member for Dundee, East (Stewart Hosie) that the future price of oil looks worrying. To follow up on the point made by my hon. Friend the Member for Esher and Walton (Mr. Taylor), we still see no coherence in what the Government are trying to achieve through the fuel duty. Do they want to set a competitive level or are they concerned only with maximising revenue? Do they really recognise the necessity to ensure that our industry remains competitive?

This illustrates the central contradiction in the Chancellor’s approach. That contradiction was there before today’s Budget, but it was also clearly displayed within it. It can be summed up by looking at the temporary VAT cut, which was introduced with the intention of reducing the severity of the downturn by about 0.5 per cent. of gross domestic product. There are questions about whether it was the most effective way of reducing tax in order to achieve that goal, but its introduction provided a wonderful moment of hope that perhaps, after years of the Government thinking that taxes on businesses and consumers could be increased without limit, without having any negative effect or inflicting pain on the economy, the Chancellor was going to cut taxes to benefit economic growth in the United Kingdom. However, the reduction is, of course, temporary, and due to be reversed at the end of the calendar year—and if we look at the wider set of proposals in the Budget, we see fiscal tightening over the years ahead: £1,000 of tax rises per family over the next two years.

As the right hon. Member for Birkenhead said, the massive expansion of expenditure over a number of years has led to an unsustainable structural deficit, and what we have not seen in today’s Budget is a credible path towards removing it—nor have we been given a clear sense of how the Government will arrive at a sustainable level of spending in the future. We will all be fighting those battles for many years to come. I hope to be here, along with the right hon. Member for Birkenhead, to listen to future Budgets, which I hope will make the real progress that this one has failed to make.

6.36 pm

Mr. Nigel Evans (Ribble Valley) (Con): It is always good to follow my hon. Friend the Member for Altrincham and Sale, West (Mr. Brady)—which is what my hon. Friend, in turn, said about the right hon. Member for Birkenhead (Mr. Field). They both made forceful and thoughtful speeches, showing great restraint in their timing; I shall do the same, as I know that at least one other Member wishes to contribute to the debate.

First, I declare an interest as the proprietor of Evans News, a convenience store in Swansea that sells alcohol and cigarettes, for both of which this Budget has implications. Much has been said about the public debt that has been built up, and the enormous public debt that will be built up this year and next—the greatest public debt that this country has ever seen.

Government Members accuse us of just wanting to cut public spending, but that is simply not the case. We want to see public spending improved in some key areas. As many hon. Members will know, after getting a
22 Apr 2009 : Column 331
super-bug infection in a Swansea hospital, my mother died on 27 March. Almost 10,000 people died of super-bug infections in 2007, and no Member wants to see avoidable deaths continue at the present level in our hospitals. To put the number of hospital deaths from super-bugs into context, fewer than 3,000 people died from accidents on the roads. Money should be directed towards ensuring that hospital infections are completely eradicated; they seemed not to occur at all 20 years ago, yet all of a sudden there are massive numbers of deaths. I wanted to raise that issue on behalf of my mother and others, but I shall not concentrate on it any further today.

I wished to raise a number of points, but given the time constraints, I shall deal with only a few of them. Some hon. Members have already spoken about the support needed by small and medium-sized enterprises. Business rates clearly affect them, and although the Government have announced that the misery to be inflicted on SMEs will be spread over more years, the fact remains that they will still have to suffer the pain of paying higher business rates. Some SMEs are marginal businesses, and some make hardly any money, so we must ensure that we support them properly, and find ways of limiting the business rates that they have to pay.

I also want to say something about credit insurance, and also something about the short-time working subsidy, which the Government need to consider further.

One campaign that I have been running, which has clearly been a complete flop, is the “Axe the Beer Tax” campaign. We saw further increases in taxation on beer today, yet 40 pubs close every week, and thousands of people are losing their jobs every year. Pubs are small and medium-sized enterprises, and we all know the great work that those iconic British institutions play in our communities, not just in rural areas, where they are particularly important, but throughout the country. Pubs have dual uses, and the rate at which they are closing has not been helped by the continuation of the taxation that the Chancellor has announced today.

I have received a letter from the Government. We asked about a differential tax rate for beer pulled at the pump as opposed to beer sold in bottles and cans from supermarkets, but I am told that we cannot have that, because the EU will not allow it. I implore Ministers to go to Brussels, sit with the Commission and work out what it takes to change that directive, or law, so that we can start to support the great British pub again. I will leave that suggestion with the Exchequer Secretary to the Treasury; I know she is aware of the issue.

The next issue is fuel, which my hon. Friend the Member for Altrincham and Sale, West mentioned. Fuel is almost reaching £1 a litre again—another increase was announced in the Budget today—and 70p of that £1 goes in taxation. It is not as if we operate in splendid isolation from other countries. We do not. My hon. Friend mentioned hauliers, who are put at a competitive disadvantage. For my constituents in rural areas, cars are not luxuries. In many cases, no rural public transport whatever is available to them, so they need their cars. I ask the Government to look at the impact that that increase is having on rural drivers and people who need a car to go to work. Government must not simply take motorists for granted and impose ever-increasing rates of taxation on them.

22 Apr 2009 : Column 332

One area that the Government might reconsider, where we might be able to make substantial savings, is that of some public sector salaries—my right hon. Friend the Member for Wokingham (Mr. Redwood) touched on this subject. MPs are pilloried in the papers for the amount that we earn, but my goodness, we are mere amateurs compared to some local authority chief executives and officers, and others who operate within the public sector.

It has been recorded that more than 1,000 people who work in local authorities earn more than £100,000. At least 16 of them earn more than the Prime Minister, at more than £194,000. One earns more than £500,000. For goodness’ sake, where is the pay restraint in local authorities? Pensioners and people living on limited and poor incomes are having to scrape together the money to pay their council tax, yet it is being siphoned off by an elite group who work for our local authorities. That must be looked at again. Such salaries must be capped. There has to be restraint in our local authorities.

The other issue also involves the public sector, and there must be capping here, too. I serve on the Culture, Media and Sport Committee, and I always enjoy having Mark Thompson, the director-general of the BBC, give evidence before us—but he earns more than £800,000. I cannot believe that sort of money—and of course he also has expenses on top of that. Again, that makes MPs look like complete amateurs, as such people are trousering lots of money in expenses and showing no restraint whatever.

The head of Network Rail earns £1.25 million a year. Adam Crozier of Royal Mail earns almost £1.25 million. Andy Duncan at Channel 4 earns £1,211,000. Where is the pay restraint in the public sector? One lady has just taken over as chairman of Ofcom; she works less than five days a week, and earns more than £200,000 a year. [Interruption.] I am informed that she works a three-day week. We know that there are quango heads who earn substantial sums for part-time work. Quite frankly, that shames us all, because we have lost the plot, and lost our grip.

A lot of non-jobs are advertised in The Guardian and local papers up and down the country. If they did not exist, nobody would miss them, but my goodness, we would all benefit from saving the money that we are throwing at some of those non-jobs.

I have been a Member of Parliament for nearly 17 years, and I have to say that this Budget, as a whole, is the grimmest Budget, for the grimmest conditions, that I have ever seen. We have had a bankrupt Budget from a bankrupt Government who now administer a bankrupt country. Each time the Chancellor said that he wanted to do something to help the country, I thought that he was going to announce his resignation, but sadly, he did not. The best thing that he and the rest of this Government could do would be to go to the country, and ask for the public’s verdict on how they have conducted the country’s affairs.

6.45 pm

Willie Rennie (Dunfermline and West Fife) (LD): I am not sure whether it is the immediate effect of the Budget or that the House authorities have decided to turn up the air conditioning, but I have been freezing for three and a half hours. I am glad that I am now able to exercise a little—to get moving, and start the blood circulating around my body.

22 Apr 2009 : Column 333

I do not know whether I am alone in this, but I do not like to think about the stars and the planets. It tends to hurt my head if I think about things that are beyond my comprehension, and I think that that was the Chancellor’s general approach today. He preferred to talk about the minutiae. He spurted out figures, one after another. In one section of his speech, when he was talking about banks and percentages, we heard about percentages of 59, 68, 74, 78 and 79, and sums of £175 billion and £173 billion. He then mumbled some generalisations about the future, but he avoided talking about the big picture.

I think that it was the hon. Member for Esher and Walton (Mr. Taylor) who asked what was the vision for the Budget, and he was spot on. If people are to buy into the pain that we will experience, they need to know what is the promise—the pledge—for the future, but there was nothing for them to grab other than a series of individual announcements. I welcomed some of them: the announcement on carbon capture, about which I shall say more shortly, was excellent. However, there was no big vision. There was nothing for people to grab hold of and consider to be worth going through pain for.

One of the biggest financial stimuli—although I am not sure whether the Chancellor classed it as a financial stimulus—was for Jobcentre Plus. While I think it worthy to invest more money to retrain and support people, I do not recall the Chancellor tramping around the world trying to secure the support of other countries for that sort of financial stimulus. I am not sure whether we have been given the Budget that we have been promised over the past few weeks. I believe that this is a Budget of missed opportunities.

The big debate on which the Prime Minister likes to try to make us focus deals with whether we are to have the do nothing approach of the Tories or the all-action approach of the Labour party. It would be nice if it were as simple as that, but in the case of a financial stimulus it is what we do that counts. I want to try to create something new out of this crisis. I do not want to patch up the old; I want to create something of which we can be proud. The hon. Member for Nottingham, South (Alan Simpson) made some good points when he described, very knowledgeably, the experiences of South Korea. I think that we should try to build something of that kind.

I am particularly disappointed because a manufacturer in my constituency is having to lay people off because the train maker Bombardier and the bus maker Alexander in Falkirk have laid people off, having not secured the orders that were promised in the general furore following the initial financial crisis. The fact that people who were employed to manufacture buses and trains are being laid off at a time when we are trying to create a new environmental economy is an indication that the Government may have got it wrong.

In Dunfermline, the break-up of the Dunfermline building society has been a traumatic experience over the past two weeks. I am pleased that the Scottish Affairs Committee has agreed to conduct an inquiry into the breaking up of Scotland’s largest mutual society. I want the Committee to take evidence from a range of people, not just the directors, the management and the
22 Apr 2009 : Column 334
Financial Services Authority. I think that the Prime Minister should consider giving evidence. He should do so because when he was Chancellor he did not impose the appropriate financial regulatory machinery that would have prevented these catastrophic mistakes from being made within the society. Although it is quite a small society in UK terms, it is a symbolic institution and it is right on his doorstep. He will feel pressure locally, therefore, and he might want to seek the opportunity to explain what his role was in the demise of the society.

There are some related issues. I was hoping that we might get some more radical reform of the Financial Services Compensation Scheme, because the balance between risk and value in how the levy is allocated is completely out of kilter. There is not the appropriate recognition of institutions that are relatively safe in their outlook, and they are therefore penalised in the same way as the reckless. I was hoping a reform would be announced today, but, alas, that did not happen.

The second issue is the capital requirement. Lord Turner has advocated a flexible capital requirement for institutions, which should lend from 7 per cent. in the good times to 4 per cent. in the more difficult times. Unfortunately, the Financial Services Authority imposes a requirement of 8 per cent. across the board, which penalises a lot of organisations and institutions that are doing a very good job in very trying circumstances.

Since the beginning of the year, I have visited about 100 businesses in my constituency. Going around them is a very interesting experience, because we often think they are one big homogenous mass and that everybody is suffering right across the board, but that is not true. Some businesses are actually doing quite well. They are smart businesses that are adapting to the circumstances. They might be operating in the “make do” area—fixing fridges or cars, perhaps. They are doing quite well; they are recruiting people and they are quite optimistic. I must add, however, that there were a lot of empty units as I travelled around the industrial estates, so there were others who were not able to speak for themselves. Nevertheless, we should acknowledge that despite the trying circumstances some businesses are doing quite well, and we should not kid ourselves that they are one big homogenous mass. We should reflect on that when devising policy, because we need to have appropriate mechanisms in place to support the businesses that are doing well—despite the best efforts of the Government, I would add.

Bank lending is an issue. The Red Book contains some figures about how much the banks are committed to lending over the next year: £25 billion for RBS, £14 billion for Lloyds, and £5 billion for Northern Rock—and I am sure there are others. The trouble is, however, that it is all very well committing, but the conditions and the commercial requirements that are in place are crucial. We need to have arrangements that recognise valuable businesses.

Next Section Index Home Page